EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 5]
[2014] WASC 231
•30 JUNE 2014
EC DAWSON INVESTMENTS PTY LTD -v- CRYSTAL FINANCE PTY LTD [No 5] [2014] WASC 231
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 231 | |
| 30/06/2014 | |||
| Case No: | CIV:1176/2008 | 26 JUNE 2014 | |
| Coram: | BEECH J | 26/06/14 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff's application for further inspection dismissed | ||
| B | |||
| PDF Version |
| Parties: | EC DAWSON INVESTMENTS PTY LTD CRYSTAL FINANCE PTY LTD ROBERT FREDERICK COOMBS |
Catchwords: | Practice and procedure Discovery and inspection Orders for inspection Application for further inspection |
Legislation: | Nil |
Case References: | EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 3] [2013] WASC 183 EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [2014] WASC 114 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
CRYSTAL FINANCE PTY LTD
First Defendant
ROBERT FREDERICK COOMBS
Second Defendant
Catchwords:
Practice and procedure - Discovery and inspection - Orders for inspection - Application for further inspection
Legislation:
Nil
Result:
Plaintiff's application for further inspection dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr P Redding
First Defendant : Mr G M Abbott
Second Defendant : Mr G M Abbott
Solicitors:
Plaintiff : Redding & Associates
First Defendant : Carol Bahemia
Second Defendant : Carol Bahemia
Case(s) referred to in judgment(s):
EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 3] [2013] WASC 183
EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [2014] WASC 114
- BEECH J:
1 (This is an edited version of reasons delivered in an unpublished format on 26 June 2014).
Introduction
2 On 27 March 2014 I resolved issues between the parties about the question of which of Crystal's transaction files should be made available by the defendants for inspection by the plaintiff and gave reasons for my decision.1 I ordered that the defendants make available files relating to some 286 transactions. I also stated that it would be open to the plaintiff to seek further inspection based upon the fruits of the inspection of the files the subject of the order of 27 March 2014.
3 The plaintiff has applied for orders that it be permitted to inspect the files relating to a further 187 transactions.
The decision on 27 March 2014
4 This application must be viewed in the context of the decision on 27 March 2014.
5 In that decision at [6], I set out the three categories of the plaintiff's pleaded claims that remain available to and after my decision on the preliminary issues published in May 2013.
6 I pointed out at [7] that both the second and third categories are framed by reference to the period up to 16 January 2006, and do not apply thereafter.
7 The plaintiff had sought substantially all of Crystal's files. The court adopted the defendant's approach involving inspection of more than 200 files.
8 At [31] I said as follows:
The plaintiff seeks the maximum scope of inspection to best attempt to ensure that nothing is missed in assessing which transactions are, or might be, the subject of liability within the categories that remain. The potential benefit to the plaintiff of further inspection of transaction files has to be balanced against a number of things. These include:
(1) the extent of inspection that has already occurred;
(2) the history of this litigation;
(3) the extent of other documentation already available to the plaintiff through other means;
(4) the amount of money involved in each individual transaction;
(5) the time, expense and delay involved in further inspection; and
(6) the apparent strength of the foundation for an expectation that such inspection might bear fruit from the plaintiff's perspective.
9 The exchanges between bench and counsel on 27 March 2014, and the oral and written reasons for decision given made it, in my respectful view, absolutely clear that any application for further inspection must be based on what was obtained from the inspections done after 27 March 2014 giving rise to a reasonable foundation to expect that documents will be found on other files that would justify further inspection. For example, in EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4]2I said as follows:
I note that, as was accepted by the defendants in argument, when the plaintiff has completed inspection of what is now a list of something more than 200 transaction files, depending upon the results of that inspection, it would be open to the plaintiff to seek further inspection based upon the fruits of the inspection. That is not an invitation to reopen the arguments which have been heard and determined today. Rather, it is to note that, depending upon the results of inspection, it may be that the plaintiff says in effect, 'well, this is what we obtained in relation to these files. That gives rise to a reasonable foundation to expect that things will be found on other files that justify the time, cost and delay of further inspection'.
10 The effect of the decision on 27 March 2014 is that there is only one remaining available basis for a claim to inspect further files. That is for the plaintiff to demonstrate that the results of the further inspection after 27 March 2014 mean that there is a reasonable foundation to expect that the further inspection sought would bear fruit that would justify the time, cost and delay of that further inspection.
Events since 27 March 2014
11 Between 27 March 2014 and 15 May 2014 the plaintiff conducted a little under eight hours of inspection over the course of three days, 10 April, 23 April and 30 April 2014. The plaintiff inspected something more than 100 transaction files.
12 There was a further directions hearing on 15 May 2014. At that hearing the court ordered the plaintiff to set out in writing the files it wished to inspect in addition to those the subject of the order of 27 March 2014, with grounds. In context, 'grounds' is a reference to the grounds on which the results of inspection to date justify further inspection. It was made clear that, to the extent that the plaintiff had elected not to inspect all of the files the subject of the order of 27 March, such files would not be and were not to be the subject of an application for further inspection.3
13 In correspondence, the plaintiff did not set out the grounds on which the fruits of inspection after 27 March 2014 justified further inspection. Rather, the plaintiff's solicitor asserted that it considered that the plaintiff may have a claim and that inspection was necessary to determine if there was a claim.
14 In conferral, and in correspondence, the plaintiff did not assert or explain how its proposed list of files for further inspection (of 29 May 2014) was based on the fruits of the inspection after 27 March 2014. Regrettably, it appears to have been the case that the plaintiff did not entirely understand or accept that any application for further inspection must necessarily be founded on a demonstration that the documents inspected after 27 March 2014 objectively gave rise to grounds to inspect further files. I will return to this point.
15 On 5 June 2014 the plaintiff filed a list of transactions that it claims give rise to a liability on the part of the defendants. That would take account of the inspection done since 27 March 2014. For the reasons explained in EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4]4 the files inspected under the orders then made are those most likely to give rise to liability of the defendants. The upfront commissions for the transactions in the list of 5 June 2014 total about $60,000. That bears on what considerations of proportionality would suggest as to the disposition of the present application.
The disposition of the application
16 The plaintiff's solicitor has evidently formed a particular view of the effect of what I said on 27 February 2014. He submits that the only issue is whether he, as the plaintiff's solicitor, has engaged in an enquiry in relation to the considerations referred to.5 If so, he submits, 'that ought to be the end of it'.6
17 I do not agree with that understanding of my reasons. In my view, it is clear from what I said and wrote that any application for further inspection would involve an objective assessment of the matters referred to.7 On 15 May 2014 I referred to the need for the plaintiff's solicitor to make his assessment of those matters as a necessary first step.8 That does not mean the plaintiff's solicitors assessment is the end of the matter. To the contrary, it is only the first step.
18 This interpretation by the plaintiff's solicitor of the effect of the reasons and orders of 27 March 2014 was also evident in the conferral process. This interpretation was the central element of the plaintiff's submissions. For the reasons I have given, I reject it.
19 In my view, as I have said, the effect of the decision I made on 27 March 2014 is that any application for further inspection must necessarily be founded on the plaintiff demonstrating that the fruits of inspection after 27 March 2014 justify inspection of further transaction files, notwithstanding the considerations referred to in the decision on 27 March 2014, including at [31].
20 In my opinion, the plaintiff's application and supporting evidence falls well short of demonstrating that.
21 The affidavit in support of the application was affirmed by the plaintiff's solicitor, Mr Redding.
22 Paragraph 29 of the affidavit of 12 June 2014 states that as a result of inspection, Mr Redding undertook a further review and analysis of other potential transactions the plaintiff wished to claim. This analysis was said to have occurred because of the results of inspection and the 13 matters set out in [29.1] - [29.13]. This was said to have led to the view that additional transactions could potentially be claimed by the plaintiff, but that until inspection occurred a view could not be formed on whether those transactions should be claimed.9
23 This evidence does not appear to be directed, primarily at least, at the important question of the extent to which any further inspection was justified by the fruits of the inspection already undertaken. Rather, this part of Mr Redding's affidavit appears to echo the plaintiff's earlier position, asserted in March 2014, that inspection is needed in order for the plaintiff to make a final decision as to what transactions it wishes to make a claim in respect of. To the extent that there is any reference to the fruits of the inspection undertaken, it is unacceptably general.
24 In [35 ] - [43] of his affidavit Mr Redding gives a number of examples of what he describes in [35] as the process he undertook to form the view that additional transactions could potentially be claimed. In my opinion, consideration of these examples does not sustain an order for further inspection. In summary:
(1) the plaintiff has not demonstrated that the application is based on the fruits of the inspection after 27 March 2014, as distinct from being a further articulation of the kinds of arguments put and resolved, or available to have been put, on 27 March 2014;
(2) much of the documentation referred to was available to the plaintiff before 27 March 2014;
(3) the plaintiff's approach does not appear to embrace the temporal requirements of liability in categories 2 and 3; and
(4) four of the eight transactions used as examples are on the list of transactions the plaintiff intends to claim as set out in the list of 5 June 2014.
25 To the extent I comment, in what follows, on the apparent merits of a potential claim, those observations do not reflect or constitute concluded views. Rather, they are preliminary in nature, and relevant to my discretion as bearing on the apparent strength of the foundation for an expectation that any further inspection might bear fruit from the plaintiff's perspective.
26 The Anderson transaction has not been the subject of any inspection. The documents referred to in [36] of Mr Redding's affidavit were copied from inspections before 27 March 2014. The affidavit contains no suggestion or explanation of any connection between any inspection after 27 March 2014 and the further inspection now sought.
27 Further and in any event, there is no assertion by the plaintiff, and no documentary foundation for an assertion, that any commission has been paid to the defendants in respect of this transaction.
28 Further, Mr Coombs' affidavit says that the transaction settled in the FRC book and commission was paid to FRC.10 Further, Mr Coombs says at [8] that no file on this transaction is held by Crystal, and that the plaintiff has discovered a WIP file for this borrower.
29 There was a transaction for the borrower Cynthia Ashley on the 27 March 2014 list. Mr Redding's affidavit refers to many documents that he says he has seen.11 The affidavit does not say which if any of those documents were seen in the course of the post 27 March 2014 inspection. In this regard, the language of this part of the affidavit may be contrasted with that of [41] where it is said 'on the file inspected', a certain document was seen. Further, the Ashley transaction is already on the claim list of 5 June 2014.
30 Additionally, the list of 12 June 2014 asserts a potential category 2 claim for the Ashley transaction. Mr Redding's affidavit refers to documents with a handwritten note dated 08/06, an apparent reference to August 2006.12 No explanation is offered by the plaintiff as to the foundation for an inference that any alleged use of FRC property or information occurred before 16 January 2006, as is required for a category 2 claim.
31 The next example given by Mr Redding is for the borrower Drake. Mr Coombs' evidence is that the plaintiff has already had the right to inspect in respect of the same transaction, as it was on the 27 March 2014 list.13 Further, this transaction is on the plaintiff's list of transactions claimed dated 5 June 2014.
32 Similarly, the transaction for the borrower Maljcov is also on the plaintiff's claim list of 5 June 2014. Further, and in any event, no connection is shown by the plaintiff between the inspection that has occurred and the need for further inspection.
33 In relation to the transaction for McCrae, Mr Redding's affidavit refers to a number of documents. The affidavit does not say which if any of them were obtained through inspections. Quite clearly, not all of them were. For example, the documents referred to in [40.12.3], [40.12.4] and [40.12.5] were exhibits at the trial of preliminary issues; exhibits B956, 957 and 958. There is no evidence that any of the documents referred to were obtained only after the inspection after 27 March 2014.
34 Further, as to the evident foundation for a claim in this respect, it is to be noticed that the clients were on the WIP list.14 The fact that there was a signed authority must be viewed in that light. See the reasons relating to transaction 40 Pallidino.15
35 Further, the foundation for any inference that information was used before 16 June 2006, as is required for liability under category 2, is not explained.
36 For both transactions involving Robins and Van Proctor, Mr Coombs' evidence is that there is nothing more in the defendants' possession than what has already been inspected.16 The transaction file relating to Robins already inspected under the 27 March 2014 orders contains all documents held by Crystal on the transaction in relation to which inspection is now sought. Under the 27 March 2014 orders the defendants produced the only transaction file for Van Proctor that they possess, and the only file they discovered.
37 In my view these matters mean that the plaintiff's application for further inspection must be rejected, because it has not been shown to be founded on the fruits of the inspection that has occurred since the decision of 27 March 2014.
38 Further, and in any event, in my view when the plaintiff's application, and its asserted foundation for further inspection, is balanced against the matters referred to in [31] of my decision of 27 March 2014, in light of what I have said already, the appropriate balancing of the various consideration lies in favour of rejection of the plaintiff's application for further inspection.
39 Finally, the plaintiff submits that it adopted and invited a pragmatic solution on the question of further discovery. The defendants submit to the contrary. It is not necessary to trace the history of the extensive correspondence of the parties, all of which I have considered. It is enough to say that, in my view, nothing in that correspondence militates in favour of making the orders for further inspection sought by the plaintiff.
Conclusion
40 For these reasons, the plaintiff's application for further inspection is rejected.
1EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [2014] WASC 114.
2EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [33].
3 ts 1415.
4EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [27] and [29].
5EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [33].
6 ts 1432.
7EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 4] [33].
8 ts 1412 - 1414.
9 See affidavit of Paul Redding affirmed 12 June 2014 [30] - [31].
10 See affidavit of Robert Frederick Coombs sworn 24 June 2014 [8].
11 See affidavit of Paul Redding affirmed 12 June 2014 [37].
12 See affidavit of Paul Redding affirmed 12 June 2014 [37.5].
13 See affidavit of Robert Frederick Coombs sworn 24 June 2014 [10].
14EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 3] [2013] WASC 183 [852].
15EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [No 3] [796] - [802].
16 See affidavit of Robert Frederick Coombs sworn 24 June 2014 [13] - [14].
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